About to Miss Your Q1 Targets? Here's a 5-Step Response Plan

Jessica Stillman is a freelance writer based in Cyprus with interests in unconventional career paths, generational differences, and the future of work. She has blogged for CBS MoneyWatch, GigaOM, and Brazen Careerist.

Yup, it's March already (how did that happen so quickly?), which means that the end of the first quarter is fast approaching. How is your business doing?

If the answer doesn't bring a smile, VC Brad Feld has some suggestions. In a recent post on his consistently interesting blog, Feld suggests entrepreneurs take a hard look at their numbers and not be overly optimistic about the rest of the year if the first three months aren't shaping up to meet expectations.

"Q1 is the easiest quarter to make since you just created the annual plan. If you miss Q1, especially in a recurring revenue, services oriented business, or adtech business, there is almost no way you will make it up over Q2 – Q4," he warns. Rather than comforting yourself with fairytales about miraculous improvement (or panicking), Feld suggests a five-point action plan instead:

Step 1: Put on the brakes right now on discretionary spending, especially headcount. You are probably spending at plan. If sales / revenue / MRR are behind plan, you are just creating a bigger problem for yourself.

Step 2: Do an aggressive root cause analysis of why you missed Q1 so far (January and February). Use the five whys approach and keep digging until you actually understand what is going on. Don’t let your sales organization wave things off.

Step 3: Keep playing through on your plan for all of Q1 other than discretionary spending. Be surgical about what is going on. Use this as a wakeup call that you aren’t executing well yet, or at least to the plan you put out there.

Step 4: Re-forecast Q1 and the rest of 2013 based on what you expect the actuals for Q1 to be. Again, go deep. You just created an annual plan so the process and the numbers should be fresh. Use it to re-forecast based on the new information you learned in January, February, and Step 2.

Step 5: Call a board meeting for around April 15. Make this a Q1 review and Q2 – Q4 planning meeting. As part of this, get a new 2013 plan approved that takes into consideration what you learned in Q1.